Rees-Mogg attacks ‘idiotic’ green levies on UK steel industry

Jacob Rees-Mogg has launched a stinging broadside against “idiotic” green levies that put Britain's steel producers at a disadvantage to foreign competitors, in a strong hint that the Business Secretary could scrap the taxes.

The Business Secretary said it was “absolute madness” that the UK was retaining levies that were implemented under legacy Brussels rules – laws that Government sources pointed out were not being fairly implemented on the Continent by the likes of Germany.

He said: “Our steel industry now spends £30 [per megawatt hour] more for electricity than its competitors. This is absolute madness, because then you say, we've got to help the industry. If we had energy [at the same cost] as everybody else, it wouldn't need Government help.

“This £30 per megawatt hour is idiotic. It just makes it harder for us to compete. I want to see proper, competitive free markets and the good quality of British steel will shine through.”

Whitehall is understood to have been in talks for several months with the owners of British Steel's plant in Scunthorpe, north Lincolnshire over a taxpayer bailout worth “hundreds of millions of pounds”. The site, Britain's second-biggest producer, was bought by Chinese firm Jingye out of insolvency in 2020 and employs around 4,000 people.

Although ministers have not ruled out stepping it, Mr Rees-Mogg indicated that it was imperative that the steel industry be put on a firmer long-term financial footing now that Britain is no longer shackled to EU rules.

His predecessor Kwasi Kwarteng announced a consultation to provide high-electricity using businesses like steel and paper mills with help to pay their energy bills in August.

Relief for the costs of renewable levies, including Contracts for Difference, the Renewable Obligation and Feed in Tariffs, would be offered to an estimated 300 businesses.

Mr Rees-Mogg's remarks signal a stiffening of resolve under Liz Truss that risks further inflaming tensions with climate change campaigners.

On Monday, the Egyptian government, host of the next UN climate summit, warned the UK against backtracking on commitments made at Cop26. Ms Truss has already offered more than 100 new licences for oil and gas in the North Sea, for example.

Mr Rees-Mogg said that the steel industry is “a classic example of what we have got wrong” since the late 1970s.

Forty years ago, British steel was “in first place wearing the Union Jack”, the Business Secretary said at an event at the Conservative Party conference.

“And out comes the Government with a great weight [of regulation and levies] and puts it around the neck [of the industry] so that it is staggering forward. And we've done that to British steel. And we've got to stop doing that because we want industry in this country to be effective and competitive.

“I hope that by getting a sensible policy all around, everyone will want to buy British steel all over the world.”

Meanwhile, Mr Rees-Mogg insisted that his backing for shale gas exploration had not wavered despite a backlash from environmental campaigners.

“One of the reasons I like shale gas is it makes us less dependent on Russia… If our immediate neighbours are dependent on Russia, the LNG ships come sailing in, if one European country is paying more than another it goes to that country. So if we had shale that would be an enormous help, not just for us but for the whole of Europe,” he said.

He said that fracking decisions would be devolved to local villages, towns and communities affected by the drilling of wells.

“I think we should say to people, while the well is being built and you are disturbed by lots of lorry movements and so on, here is a compensatory payment,” he said.

“And then you say well the gas is coming out from under your feet therefore you get royalties. You’ll have continuing payments for people from whom the gas is coming. And if people say no I don’t want to have a nice cheque, thank you very much, I'd rather have LNG coming in and creating a greater carbon footprint than having nice friendly shale gas made in England, then that’s what it will be. But it seems to me it’s definitely worth trying.”